10-KPeriod: FY2015

COHERENT CORP. Annual Report, Year Ended Jun 30, 2015

Filed August 28, 2015For Securities:COHR

Summary

COHERENT CORP. (COHR) reported a significant increase in net earnings for the fiscal year ended June 30, 2015, reaching $66.0 million, a substantial rise from $38.4 million in the prior year. This improvement was driven by strong revenue growth of 9% to $742.0 million, fueled by recent acquisitions and increased demand in key markets like optical communications and automotive manufacturing. The company successfully realized synergies from prior acquisitions, leading to a notable 340 basis point improvement in gross margin to 36.6%. The company has strategically realigned into three core segments: II-VI Laser Solutions, II-VI Photonics, and II-VI Performance Products. Despite a challenging defense spending environment impacting the Performance Products segment, the Laser Solutions and Photonics segments showed robust growth. COHR's financial health remains solid, with ample operating cash flow and borrowing capacity to support ongoing operations and future growth initiatives, including strategic acquisitions and research and development.

Financial Highlights

50 data points
Beta

Revenue

$741.96M

36.6% Gross Margin

Net Income

$65.97M

8.9% Net Margin

EPS (Diluted)

$1.05

Total Assets

$1.06B

Cash & Equivalents

$173.63M

Free Cash Flow

$77.05M

Financial Statements
Beta
Revenue$741.96M
Cost of Revenue$470.36M
Gross Profit$271.60M
R&D Expenses$51.26M
SG&A Expenses$143.54M
Operating Income$76.80M
Interest Expense$3.86M
Net Income$65.97M
EPS (Basic)$1.08
EPS (Diluted)$1.05
Shares Outstanding (Basic)61.22M
Shares Outstanding (Diluted)62.59M

Key Highlights

  • 1Net earnings increased by 72% to $66.0 million in FY2015, with diluted EPS rising to $1.05 from $0.60 in FY2014.
  • 2Total revenues grew by 9% to $742.0 million in FY2015, driven by strong performance in Laser Solutions and Photonics segments.
  • 3Gross margin improved significantly to 36.6% from 33.2% in the prior year, reflecting successful synergy realization and operational efficiencies.
  • 4Bookings increased by 10% to $761.7 million, indicating strong future revenue potential.
  • 5The company has realigned its operations into three key reporting segments: Laser Solutions, Photonics, and Performance Products, to enhance operational focus and financial transparency.
  • 6Research and development investment increased to 6.9% of revenues, underscoring a commitment to innovation and new product development.
  • 7The company maintained compliance with its credit facility covenants and had $116.6 million in available borrowing capacity as of June 30, 2015.

Frequently Asked Questions

The improved financial performance was primarily driven by a 9% increase in revenues to $742.0 million, supported by the full-year impact of recent acquisitions and growing demand in markets such as optical communications and automotive manufacturing. Significant improvements in gross margin to 36.6% were achieved due to synergy realization from acquisitions and operational efficiencies.

Effective July 1, 2014, the company realigned its operations into three reportable segments: II-VI Laser Solutions, II-VI Photonics, and II-VI Performance Products. This restructuring aims to enhance focus on end markets and customers, improve operational alignment, and provide better visibility into profitability and cash usage.

The company is focused on penetrating new markets through innovative technologies and product introductions. Research and development investment remained strong, targeting between 7-9% of revenues, indicating a commitment to developing new products and improving existing processes to meet evolving customer requirements. They also look for strategic acquisitions to accelerate growth.

Key risks identified include dependence on international sales and global operations, the need to continually develop new products and processes to keep pace with industry developments, potential adverse impacts from global economic conditions, reliance on intellectual property protection, and significant competition. Additionally, the cyclical nature of some of its end markets and potential cuts in defense spending pose risks.